Financing for small businesses is even more challenging. Here's why!
Small businesses are notorious for not keeping proper records, especially with respects to finances. However, within recent times and with all the courses that are available which have been teaching the importance of doing so, there seems to be even a greater challenge to small businesses accessing funds and they may not be the ones totally responsible for this situation.
The rules of commerce are not being adhered to by the banks. SMEs and the entrepreneurs who run some of them are taught to keep personal and business finances separate. Yet when they seek to obtain financing, the know your customer scheme that the finance houses are using are going to the extreme. In essence, they ending up lumping the personal and business transactions of the clients together. It would appear that the finance teams have become lazy or they are just unlearned in the rules of commerce.
Even when they are schemes put in place by government to function as collateral to enable SMEs to capitalize on available opportunities, the finance houses demonstrate a weak appetite for such programs, despite the millions that have been pledged for such programs through the various schemes.
The inconsistency of information within the banks is another matter. Should you happen to ask at least 3 people within the same bank the same question, you just may get three (3) different responses from the teams who work there. There's a callousness where customers are even told by bankers, "That's above my pay grade", and the discussion is ended.
The systems are such that the productivity of these SMEs is frustrated by excessively long waits within the financial systems. Long lines, weak service performance, inconsistent information. There is even instances where a customer sought to get online banking established for over two (2) years and the bank has not been able to accomplish a seemingly simple feat despite repeat visits to the bank by the individuals. Some then went to other institutions to get sorted.
Let's not mention the others who can't get their online banking sorted out. Never mind those who bungle loan applications. What is really going on? Customers are being faced with increased fees and service charges, however the service levels are deteriorating.
No it is not limited to soft skills. The remedy lies in the fact that these financial institutions have not revised their systems to meet the rising demands of the changing public needs. The market they served has changed and these institutions have been caught napping.
The frustrations intensify as more people have experienced a change in their job roles and are seeking funding. The market is severely limiting with regards to access to start-up or developmental funds.
VCs [Venture Capitalist] and FDIs [Foreign Direct Investors], this process can be frustrated if they are located outside the domicile. The due diligence process is slow and arduous. By the time the process is completed weeks/at least a month or more may have passed.
Governments in their rush to speak to unemployment issues tout the work entrepreneurship around; they are ready to collect taxes before the entities even become established. There is no grace period and the business owner often is left wondering how come they have to pay everyone and not themselves for setting up the business.
The legislation is enforced from the get go. Social security schemes and taxation is predatory approaching many businesses within hours of their launch, however soft. Maybe it's time for a tax reform where business people would feel a sense of pride for wanting to pay taxes because they can see the environment being created to develop strong and profitable businesses.
This post will not have any pictures. However, I hope it at least got you thinking. If you so desire, write a comment below. It would be interesting to get your perspectives as business owners. So many people have expressed the above sentiments and they never seem to reach the media. Here's hoping this one makes a difference.